The Division of Oil and Gas opened bids from the lease sale at the Dena’ina Civic and Convention Center this morning. Preliminary results show that the division received 52 bids from five different bidding groups on 44 tracts, encompassing approximately 197,795 acres. Winning bonus bids totaled $6,865,835, making this sale the second largest Cook Inlet lease sale, based on bonus bids, since the areawide sale model was implemented in 1999. Bidders included Cook Inlet Energy, Hilcorp Alaska LLC, Apache Alaska, Buccaneer Alaska LLC, and William Crawford.

Today’s results are in line with the positive upturn in exploration activity and lease sale bidding in the Cook Inlet hydrocarbon basin seen over the past two years. However, the Division of Oil and Gas emphasized that it needs to verify that winning bidders are qualified and the bids are valid. Preliminary, post-adjudication results are expected to be available on the Division’s website (http://dog.dnr.alaska.gov/) by Friday, May 18.

“It is encouraging to see that our efforts to bring solid, factual information about the resources in Cook Inlet to industry have been effective,” said Natural Resources Commissioner Dan Sullivan. “Our team at DNR has undertaken significant efforts to get the word out about our world-class resources. This basin continues to attract explorers on the basis of its hydrocarbon resources and the State offers these explorers some of the most generous financial incentives in the country.”

“In the past year, we have seen old wells restarted, new exploration wells drilled, and seismic and geologic work initiated to support future development,” said Oil and Gas Division Director Bill Barron. “Cook Inlet is an excellent example of how a combination of a solid resource base and an attractive financial environment encourages exploration and development,” Barron said.

To incentivize new activity in Cook Inlet, the State of Alaska caps the tax on oil production at $0 and the production tax on natural gas from Cook Inlet at $0.18 per thousand cubic feet for new production. Producers pay a low, five percent royalty on any new discovery in the inlet for the first ten years. In addition, the State offers investment tax credits and due to legislation passed in 2010, it offers a special incentive for the first three exploration wells drilled from a jack-up rig.